Tip:
Highlight text to annotate it
X
Eric: Hi, I'm Eric. ***: And I'm ***. We're the annuity guys.
Eric: ***, High annuity rates or high annuity ratings?
***: Boy Eric, that is a common challenge to everyone seems to have is
they always call in and a lot of times they are kind of like "If I only want
to work with a very high rated company"...
Eric: Only the best.. ***: Now, who can give us the best rates? Eric: That's right!
That always balances to what you're saying...
But everybody wants their cake and eat it too. They want that
a-plus rated company.. ***: Or plus-plus..
Eric: And they want the best rate. Unfortunately, it's the only thing... ***: It
usually don't go together and there's so many factors that come into
that
when you're looking for ratings and
you're concerned about that. First of all, you have to look at what
type of ratings
these companies have. Eric: Which rating service? ***: Which rating service, yes!
Eric: We always laughed because we carry... We use AM Best typically here,
but you have AM Best, standard and poor's, Moody's,
Fitch's... and then there's this comdex which kinda of takes away all that and adds it all... ***: All...
Eric: So, which one you use? ***: Well, I like to use them all!
I mean, it's good to look at them all and see if there's one
that's a standout that has someone
R-rated really better or worse,
and then figure out why. And then also, we
favor the AM best like and the reason we like AM Best is
because they've been around for 100 years,
they focus on well over a hundred but they focus on the insurance industry;
and there's a lot of consistency and the very deep reporting in there,
and we just haven't seen them, this is just a personal opinion, I
haven't seen them go astray.
And you've seen so many
companies through the financial crisis you know that have had
challenges
and amazingly they
don't vary too much as a rule. The weaker companies maybe but not
stronger companies. Eric: These changes in the ratings are more of a glacial shift;
they kinda move,
they don't usually move from A to C like overnight, it's more like
they kinda move from an A to A minus or A plus;
move up one category. ***: Well, they'll have a negative outlook
from an A-plus... a negative outlook. Eric: It's a warning shoot across the vow
***: Yes... yes...
Eric: Ohh, they might be in trouble.. ***: And then they have a stable... and then a postivie
outlook... and
this takes years and that's what Eric and I
love about annuities in general; about A-ratings companies,
it's not like you wake up in the morning and you see the market drop.
Eric: Also, your company from an A to a D and you're in trouble.
It's not that bad. Now, it is tough to compare kind of
what A means to one rating agency to another?
***: That's really tough, Eric. That's pretty deceiving. There's so many different ways
they
use a random symbols... Eric: What they say and how they... ***: .. the pluses and minuses... and dobule A's and
triple A's...
So it helps to have someone help you decipher that a little bit.
Eric: Exactly. Just in comparison AM Best has fifteen categories.
Standard & Poor's has twenty. Moody's has twenty-one. Fitches as twenty-one; and Weiss has
sixteen. And you can guess that
good on one ends at six, and good at another one ends at ten.
So, how high or how low they are rated just to be a good company? They can fluctuate based of this ratings.
***: Well,
if we just look at say AM Best for to talk about one of them; they got like
sixteen ratings to get up their A++;
just to get to a B rating
is really really tough for a company. So, I mean you're talking about years and
years and years of
very strong financials,
good track record. So, when we start saying we don't want to work with
anything less than an
A, that's some pretty strong stuff. Eric: You're working with an
excellent company... even an A minus on
AM Best is considered an excellent company.
And so, when you're looking at that and trying to balance out then;
rates for ratings, do you want something that's good or
do you insist on something that's excellent? With your retirement,
my retirement, most the time I want something that's excellent;
however, if I have to accept good in order to meet my objectives
then that's probably the best. ***: Or very good. So,
what we're saying here
is that amazingly,
some of the A++ companies that you would think
have the financial strength, that would be giving the
most competitive type rates;
not to say they're not fair.... Eric: They're keeping the money for themselves....
***: Yeah... they're not being generous with you. So,
some of the companies that are also extremely strong but maybe not
that pinnacle, they're much more competitive and willing to
be generous with their clients and give better company rates.
Eric: Sometimes they're giving better benefits at that expense of not holding back as much
for themselves... ***: And they're more innovative with their products. They come out with
products that meet the need better. So
folks, it truly is a balance of choosing between those rates and ratings.
Eric: And what we like to do is really
present to you exactly why we're presenting a company; if they're not the
highest rated,
giving you that balance and say "hey,
you're giving up the safety and stability... and not really giving up but
you're taking a lower-rated company
in exchange for a superior rate typically.
Kinda balancing out first. The key thing
is does it meet your objectives for your retirement? ***: And if it does not meet your retirement objectives,
it's not even... it doesn't matter whether it's high rates or
under ratings. Eric: It has to meet your needs.
***: Now Eric, we have people a lot of times say to us
"what difference does it make? There's a guarantee association,
I'll only put so much in; and that state guarantee association is
going
to cover what I've got in the annuity. Eric: Well,
and obviously if your agent is talking to you about the Guaranty Association.. ***: He's not suppose to...
Eric: ... there might be a problem to begin with. What happens if a company goes default?
***: They go into receivership.
Eric: So, all the sudden you hope the state comes in. Usually what happens is
another insurance company comes in
and starts to deal with the obligations of that company. ***: There assets are moved over to a
more successful profitable company,
but there can be some land mines there
because folks your money can be tied up for a reasonable length of time or a
good length of time before you can actually get access to it again;
even though you will eventually get access and there's been virtually no
money lost in annuities over the years... Eric: We should point out
that it's
the cash side that... ***: Yes... Eric: You may have bought annually for the benefits
or the riders,
well that may not be part of what's continued on with the new company.
***: The new company may not have to guarantee
the guarantees that you set up originally for your retirement, that was
the purpose of the annuity is to have these contractual guarantees throughout
your retirement
and the new company is only obligated to
guarantee your cash. Eric: So, we don't want to sound alarmist but we want you to take
into consideration
all the aspects when looking at rates and ratings;
be comfortable with deciding good,
excellent or not so good. ***: Yes, and just to understand
that probably the safest, one of the very safest places in the entire world
to put money is in annuities.
They have a wonderful track record but understanding which annuities to
put the money in is probably the
very important factor. Eric: Just in summary, we don't want you to gamble with your
retirement.